Comments on: Should there be limits on commodity investment? http://blogs.reuters.com/great-debate/2009/03/09/should-there-be-limits-on-commodity-investment/ Thu, 21 Jul 2016 07:57:19 +0000 hourly 1 http://wordpress.org/?v=4.2.5 By: EY Davis http://blogs.reuters.com/great-debate/2009/03/09/should-there-be-limits-on-commodity-investment/#comment-10048 Mon, 16 Mar 2009 17:47:23 +0000 http://blogs.reuters.com/great-debate/?p=2387#comment-10048 Someone may also want to ask why JP Morgan (which is currently on the TARP dole) is speculating in the silver market with a huge short position that amounts to almost one quarter of all of the silver produced in the world in a whole year.

Why is the US government giving money to banks just so they can use it to manipulate the small silver market?

The current market manipulation makes the Hunt brothers look like a couple of pikers.

“The vast majority of the additional short selling over the past two months was concentrated new short selling by those already holding a large concentrated short position. The most plausible explanation for this new selling was to cap the price and limit damage caused by rising prices to an already existing large short position. This is manipulation, pure and simple. If the price of silver were at a fair and free level, there would be many different participants competing to sell contracts, not just one to four. As it stands, there are very many traders buying and looking to buy, while the sell side is populated primarily by one big U.S. bank.”

TED BUTLER
http://www.investmentrarities.com/03-10- 09.html

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By: Anubis http://blogs.reuters.com/great-debate/2009/03/09/should-there-be-limits-on-commodity-investment/#comment-9999 Sun, 15 Mar 2009 23:54:31 +0000 http://blogs.reuters.com/great-debate/?p=2387#comment-9999 There is always more than way to skin a cat. Different circumstances will require different tools to correct similar problems. We have the ability to reason and should rely upon it rather than philosophical dogmas.

Clearly when greed is prevailing and integrity is viewed as weak, stringent regulation will ultimately prevail. Future catastrophes will be averted but at some cost to efficiency and productivity. For a less regulated system to succeed all the players must act with integrity and due diligence so a to avoid a mess like the one we’re in.

I think such qualities of character are a product of upbringing and not the business school one attends. This generation of parents must recognizes this fact and raise their children wisely. If they succeed, I hope there is time enough left for their children to lead.

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By: KP Jensen http://blogs.reuters.com/great-debate/2009/03/09/should-there-be-limits-on-commodity-investment/#comment-9890 Fri, 13 Mar 2009 21:57:42 +0000 http://blogs.reuters.com/great-debate/?p=2387#comment-9890 Wow – what an incredible collection of pinheads. The volume of US currency has increased 300% in the past 5 months, so for every dollar that existed last September there now are 4. The half-life of the US dollar is 14 years at 5% inflation, meaning in real terms it currently is less that 10 years. The US dollar is going into the toilet, and skyrocketing commodity prices won’t be because of speculators. They are attributable to the criminal ineptitude of the Treasury and Fed. Direct your anger to the appropriate places and you may get some relief. Commodities traders ain’t the place, brother.

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By: nick http://blogs.reuters.com/great-debate/2009/03/09/should-there-be-limits-on-commodity-investment/#comment-9724 Thu, 12 Mar 2009 13:22:23 +0000 http://blogs.reuters.com/great-debate/?p=2387#comment-9724 Some good but unfortunately spurious comments from the author and commentators.

All of you have ignored the role of politics, tax distortion and demand/supply manipulation that has occured which is outside the realm of speculators e.g.

1) China,Malaysia India et al have deliberately subsidised oil to the consumer so that it was at an artificially low level to market levels and therfore pushed up domestic demand during the economic boom.China and India have since decided to reduce subsidies – funilly enough this coincided with falling oil prices!

2) Globally inept farming policies the aim of which has been politically agreed protectionism have deliberately kept production and supply below what could be achieved through open markets.

2. From a point of pure political manipulation individuals such as Hugo Chavez of Venezuela (@6-7% of worlds oil) saught to drive prices up through rhetoric from out and out refusal to supply America to repeadedly saying that oil was headed up to $300 per barrel. Similarly other nations have banned the export of various commodities e.g. Thai fragrant rice to stockpile their own produce. Add to this the mania biofuels and the distorting tax and subsidies in this new area.

2. A number of mineral and other companies have manipulted supply i.e. deliberately extracted minerals at a slow pace to limit supply, in order to bolster revenue through higher price. In the instance of copper there was at one point during the boom only 3 days of available mined supply.

2. Speculators also add liqudity to markets. Where hedgers (both producer and consumer) may refuse to provide a price for a good, speculators have stepped in to fill the void. Where prices rose, speculators were on the sell side, ensuring that consumer hedgers could lock in a maximum purchase price, on the buy side they have stepped in whilst prices have fallen through the floor in order to lock in a sale price for the supplier. Without this prices would have peaked at a MUCH higher level and bottomed at a MUCH lower level.

Much of the Speculative world has been vilified as prices went through the roof but they are not being thanked as prices have tanked. But then, whats politics if it isnt to put the blame on others when things go wrong. Governments have seen the population explosion comming and have done nothing about it.

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By: Shiva http://blogs.reuters.com/great-debate/2009/03/09/should-there-be-limits-on-commodity-investment/#comment-9654 Wed, 11 Mar 2009 07:38:23 +0000 http://blogs.reuters.com/great-debate/?p=2387#comment-9654 Absolutely spot on and timing is excellent. It was just crazy how the commodities market was played by puppeters who were greedy. In addition to oil, I was more worried about groceries , pulses and veg that were just moving around so much with no logical reason. Not sure how we common people can influence the regulators to have tough regulations on commodities trading.

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By: Lloyd Quist http://blogs.reuters.com/great-debate/2009/03/09/should-there-be-limits-on-commodity-investment/#comment-9651 Wed, 11 Mar 2009 05:42:38 +0000 http://blogs.reuters.com/great-debate/?p=2387#comment-9651 It is interesting that most people believe that markets free from regulation result in greater competition and efficiency.We can see from this example, and many others of recent experiance , that when regulation is relaxed the result is quite the opposite. At leat the solution here seems straight forward, enforce the laws that do exist and limit any exemptions. Breaking up the giant financial supermarkets and restoring the seperation of the banking and investment communities may prove a far more intrangible problem.

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By: Bhavneet http://blogs.reuters.com/great-debate/2009/03/09/should-there-be-limits-on-commodity-investment/#comment-9604 Tue, 10 Mar 2009 17:02:41 +0000 http://blogs.reuters.com/great-debate/?p=2387#comment-9604 If exchanges are really meant to be for hedging and price discovery, let only the commercial users participate in it also make it compulsory delivery contracts…this way we sure will not ahve any further recession ever not only in US but in world markets

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By: Don http://blogs.reuters.com/great-debate/2009/03/09/should-there-be-limits-on-commodity-investment/#comment-9603 Tue, 10 Mar 2009 16:32:27 +0000 http://blogs.reuters.com/great-debate/?p=2387#comment-9603 Again the one-sided accounting perspective is a little confusing to me. If investors are pouring in money (buyers), then the exact same amount of money was taken out (sellers). Increasing expectations does not affect liquidity per se but only the price of exchange. If I buy a future ounce for $1 billion, I take $1 billion out of cash to pay. The seller gets $1 billion. So I am not sure about liquidity unless we focus soley on the current owners. Huge buying interest is equivalent to huge selling interest.

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By: allan bateman http://blogs.reuters.com/great-debate/2009/03/09/should-there-be-limits-on-commodity-investment/#comment-9599 Tue, 10 Mar 2009 15:11:43 +0000 http://blogs.reuters.com/great-debate/?p=2387#comment-9599 Commodities futures fall under 2 categories. 1) Hedgeing, a producer or shipper sets a price forward at the time of delivery. 2) Sepculator. Someone that is betting on or trying to control market pricing, and particularily for a certain forward month.Usually a true hedger, does not pay the smae margin call requirements that a speculator does. eg. A farmer shorts, or future sell 5 thousand bushells of wheat, while a speculator has NO wheat to sell, therefore cannot take delivery of the contract, so can only liquidate his position, and take the lose or profit. If you want to eliminate speculative swing in the market ( recent oil to $160/ barrel) then just elimante the specaultive positions..

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By: Steve Williams http://blogs.reuters.com/great-debate/2009/03/09/should-there-be-limits-on-commodity-investment/#comment-9592 Tue, 10 Mar 2009 11:10:57 +0000 http://blogs.reuters.com/great-debate/?p=2387#comment-9592 It is not a question of whether oor not limits are useful or needed but a simple quesiton of enforcement. USO while a great product is the embodiment of what a “spec” is and should be held to the “spec” limits.

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